US$ dollar slightly firmer, and CAD$ up 20 bpt at 8280
Reserve Bank of Australia cut rates 25 bpts last night
Aussie dollar is up 30 bpt on the news as the rate cut was already factored into the market
Crude making new highs up $1.27 at $60.20
Next minor resistance is 60.94 followed by the consolidation breakout upside objective of 68.23
This is a market that is discounting current record large inventory totals and looking forward at the massive curtailment of production which has happened over the past 4 to 6 months
Nat gas down 3 cents per MMBTU after making new highs yesterday and following through from last week’s upside breakout
Next minor resistance for june nat gas is 287
US Non-Farm Payrolls are out Friday
I believe this report could set our near term direction
Bullish payrolls should mean stronger US dollar which should pressure CAD$ and commodity prices
Bullish news will be seen as favourable to the Fed’s for interest rate hikes sooner vs. later.
Bearish payrolls should mean a continuation of what we saw in April, weaker US$ and stronger commodity prices
Not to be overshadowed but Canadian employment numbers will also be released Friday.
Grains and Oilseeds
Beans up 2 cents, corn down 4 cent into new lows, wheat down 4 cents, meal flat, bean oil up 30 bpts and canola flat
Argentinian truckers strike was resolved yesterday but overnight another strike by workers at 2 export facilities started
This is the season for Argentine strikes as the massive harvest brings hoards of workers demanding higher wages to keep up with the 30% inflation rate in the country
News of these strikes will cause bouts of short covering in the market similar to last week
These strikes are usually settled quickly and grain flow resumes with minimal impact
Spring wheat futures are making new contract lows on the heels of rapid planting progress
Spring wheat planting 75% complete up 20% from last week and 44% for the 10 yr avg
Corn planting 55% complete up 36% from last week and 41% for 10 yr avg
Bean planting 13% complete up 11% from last week and 11% for the 10 yr avg
Winter wheat is up 1% in the g/ex rating at 43%, compared to 31% last year and 48% for the 10 yr avg
Canola futures rallied sharply Monday, up nearly $10 per tonne
Only news I saw on Canola was rumours that Sinograin (China’s reserve grain and vegoil buyer) was bidding for canola or rapseed oil for their reserves??
Bean’s rallied Monday on the back of a strong bean oil market
July beans traded right into our second resistance at 978
Bull markets in the soy complex are not lead by the bean oil, they are led by the higher value bean meal complex
With planting making good progress, I doubt corn and bean rallies will be sustainable
Support for july beans is 9.50 and 9.18
Support for nov beans is 9.31 and 8.92
support for july corn is 350, dec corn is 370
Meats
Cash hogs posted another $1.00 gain Monday with tops reaching 76.50
Cutout was 0.46 higher at 74.32
Slaughter was 425K vs. 429 last week
Hog futures managed to recoup what they lost Friday with nearby May leading the way higher
May hogs expire in 9 more days on May 14
With May futures already premium to cash and still leading the rally in futures, I have to think we can maintain this higher cash trend at least for now
US Memorial Day demand should continue to support the product at least for another week in my opinion
Next resistance for summer hog futures would be last week’s highs which was also my second leg upside objectives
June at 82.62, July at 83.65 and Aug at 83.77
Closing above these levels will mean an extension of the current rally and would point to the following objectives
85.85 June and July and 84.45 August
Support is found at 79.10 June, 80.50 July and 80.70 August
Cattle prices rallied over $1.75 Monday as futures reacted to the bullish late Friday cash news, $163 live which was $2 to $3 higher for the week
Ch cutout up 1.00 and sel up 0.68
Look for Memorial Day demand to help support the beef cutouts after last week’s pounding
With the higher cash news, I wonder if we get a shot up around 152 to 154 for June
This will keep our $10 basis in play which seems to be a comfortable level for June futures/cash at this point
Support is found at 149.95
Bert Caputo CFA | Investment Advisor | The Simpson/Caputo Group |
RBC Dominion Securities Inc. | T. 1-866-989-0997 | F. (519) 747-1808 |
95 King Street South, 3rd Floor Waterloo, On, N2J 5A2
Reserve Bank of Australia cut rates 25 bpts last night
Aussie dollar is up 30 bpt on the news as the rate cut was already factored into the market
Crude making new highs up $1.27 at $60.20
Next minor resistance is 60.94 followed by the consolidation breakout upside objective of 68.23
This is a market that is discounting current record large inventory totals and looking forward at the massive curtailment of production which has happened over the past 4 to 6 months
Nat gas down 3 cents per MMBTU after making new highs yesterday and following through from last week’s upside breakout
Next minor resistance for june nat gas is 287
US Non-Farm Payrolls are out Friday
I believe this report could set our near term direction
Bullish payrolls should mean stronger US dollar which should pressure CAD$ and commodity prices
Bullish news will be seen as favourable to the Fed’s for interest rate hikes sooner vs. later.
Bearish payrolls should mean a continuation of what we saw in April, weaker US$ and stronger commodity prices
Not to be overshadowed but Canadian employment numbers will also be released Friday.
Grains and Oilseeds
Beans up 2 cents, corn down 4 cent into new lows, wheat down 4 cents, meal flat, bean oil up 30 bpts and canola flat
Argentinian truckers strike was resolved yesterday but overnight another strike by workers at 2 export facilities started
This is the season for Argentine strikes as the massive harvest brings hoards of workers demanding higher wages to keep up with the 30% inflation rate in the country
News of these strikes will cause bouts of short covering in the market similar to last week
These strikes are usually settled quickly and grain flow resumes with minimal impact
Spring wheat futures are making new contract lows on the heels of rapid planting progress
Spring wheat planting 75% complete up 20% from last week and 44% for the 10 yr avg
Corn planting 55% complete up 36% from last week and 41% for 10 yr avg
Bean planting 13% complete up 11% from last week and 11% for the 10 yr avg
Winter wheat is up 1% in the g/ex rating at 43%, compared to 31% last year and 48% for the 10 yr avg
Canola futures rallied sharply Monday, up nearly $10 per tonne
Only news I saw on Canola was rumours that Sinograin (China’s reserve grain and vegoil buyer) was bidding for canola or rapseed oil for their reserves??
Bean’s rallied Monday on the back of a strong bean oil market
July beans traded right into our second resistance at 978
Bull markets in the soy complex are not lead by the bean oil, they are led by the higher value bean meal complex
With planting making good progress, I doubt corn and bean rallies will be sustainable
Support for july beans is 9.50 and 9.18
Support for nov beans is 9.31 and 8.92
support for july corn is 350, dec corn is 370
Meats
Cash hogs posted another $1.00 gain Monday with tops reaching 76.50
Cutout was 0.46 higher at 74.32
Slaughter was 425K vs. 429 last week
Hog futures managed to recoup what they lost Friday with nearby May leading the way higher
May hogs expire in 9 more days on May 14
With May futures already premium to cash and still leading the rally in futures, I have to think we can maintain this higher cash trend at least for now
US Memorial Day demand should continue to support the product at least for another week in my opinion
Next resistance for summer hog futures would be last week’s highs which was also my second leg upside objectives
June at 82.62, July at 83.65 and Aug at 83.77
Closing above these levels will mean an extension of the current rally and would point to the following objectives
85.85 June and July and 84.45 August
Support is found at 79.10 June, 80.50 July and 80.70 August
Cattle prices rallied over $1.75 Monday as futures reacted to the bullish late Friday cash news, $163 live which was $2 to $3 higher for the week
Ch cutout up 1.00 and sel up 0.68
Look for Memorial Day demand to help support the beef cutouts after last week’s pounding
With the higher cash news, I wonder if we get a shot up around 152 to 154 for June
This will keep our $10 basis in play which seems to be a comfortable level for June futures/cash at this point
Support is found at 149.95
Bert Caputo CFA | Investment Advisor | The Simpson/Caputo Group |
RBC Dominion Securities Inc. | T. 1-866-989-0997 | F. (519) 747-1808 |
95 King Street South, 3rd Floor Waterloo, On, N2J 5A2
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